Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
335.0000 LEASES OF MOBILE TRANSPORTATION EQUIPMENT— Regulation 1661
335.0004 Barge Used as Ferry Dock. A barge, approximately 112' by 52' in size, will be leased to a city for twelve months to be used by the city as a ferry dock and a passenger loading platform. The lease with the city is for three months with options over the next twelve months. If the city does not terminate the lease, it will own the barge at the end of the lease term.
Based on the use of the barge, it will be considered an accessory to the pier and perform a function directly related to that pier. However, since the transaction with the city is a true lease and not a sale at inception, it seems unlikely that parties to the lease intend that the barge remain permanently attached during the period of the lease. Therefore, the barge would be classified as mobile transportation equipment and not real property. The lessor would have the choice of paying tax measured by its purchase price or the fair rental value measured by the rental paid by the city. The election to pay tax on fair rental value must be made with the filing of a timely return for the quarter in which the barge was first leased. 3/20/90.